Telesat has announced its financial results for the three and nine-month periods ended September 30, 2019. All amounts are in Canadian dollars and reported under International Financial Reporting Standards (IFRS) unless otherwise noted.
For the quarter ended September 30, 2019, Telesat reported consolidated revenue of $237 million, an increase of 4% ($10 million) compared to the same period in 2018. The increase was due to higher revenue related to the Telstar 19 VANTAGE and Telstar 18 VANTAGE satellites, which entered into commercial service in August 2018 and October 2018, respectively, combined with an increase from short-term services provided to other satellite operators.
Operating expenses of $38 million for the quarter were 6% ($2 million) lower than the same period in 2018. The decrease was primarily related to lower cost of sales and other expenses offset by higher compensation expenses. Adjusted EBITDA for the quarter was $203 million, an increase of 8% ($15 million) compared to the same period in 2018. When adjusting for foreign exchange rate changes, Adjusted EBITDA increased by 7% ($14 million). The Adjusted EBITDA margin for the third quarter of 2019 was 85.7%, compared to 82.8% in the same period in 2018.
Telesat’s net loss for the quarter was $123 million compared to net income of $117 million for the quarter ended September 30, 2018. The $240 million difference was the result of higher non-cash losses on financial instruments and a larger non-cash loss on foreign exchange arising principally from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars in the third quarter of 2019.
For the nine months ended September 30, 2019, revenue was $691 million, an increase of 3% ($19 million) compared to the same period in 2018. When adjusted for changes in foreign exchange rates, revenue was 2% higher ($10 million) compared to 2018. The increase was primarily due to revenue related to the Telstar 19 VANTAGE and Telstar 18 VANTAGE satellites, offset by lower equipment sales and lower revenue from certain customers in the resource sector. Operating expenses were $115 million, unchanged from 2018. When adjusting for the impact of foreign exchange rate changes, expenses decreased by 1% ($2 million). Adjusted EBITDA was $587 million, an increase of 5% ($26 million) or, when adjusted for foreign exchange rates, an increase of 3% ($19 2 million). The Adjusted EBITDA margin for the first nine months of 2019 was 85.1%, compared to 83.7% in 2018.
For the nine months ended September 30, 2019, net income was $185 million, compared to net income of $96 million for 2018. The increase in net income for the year-to-date was principally the result of non-cash foreign exchange gains in 2019, arising from the translation of Telesat’s U.S. dollar denominated debt into Canadian dollars compared to foreign exchange losses in 2018, partially offset by non-cash losses on financial instruments in 2019 when compared to 2018.
“I am pleased with our financial and operating performance in the third quarter of 2019 and the first nine months of the year,” commented Dan Goldberg, Telesat’s President and CEO. “Our Telstar 19V and 18V satellites, as well as certain short-term satellite services provided to another satellite operator, contributed to top line growth relative to Q3 last year, and our continued operating discipline resulted in an increase in both Adjusted EBITDA and our Adjusted EBITDA margin. In addition to our strong performance in the quarter and year to date, last month we successfully refinanced our existing 8.875% Notes to reduce our borrowing costs and extend our borrowing maturities. Looking ahead, we remain heavily focused on continuing to increase the utilization of our in-orbit satellites and executing on our key growth initiatives, including our planned Low Earth Orbit satellite constellation.”
Business Highlights
At September 30, 2019:
-Telesat had contracted backlog for future services of approximately $3.4 billion.
-Fleet utilization was 85% across Telesat’s fleet.
On October 11, 2019, Telesat Canada issued USD$550 million of 6.5% Senior Notes maturing on October 15, 2027. The net proceeds of the offering, together with cash on hand, were used to redeem the outstanding USD$500 million 8.875% Notes due November 15, 2024.
Telesat’s quarterly report on Form 6-K for the quarter ended September 30, 2019, has been filed with the United States Securities and Exchange Commission (SEC) and may be accessed on the SEC’s website at www.sec.gov.